Understanding the Great Depression in the United States versus Canada

It is now recognized that the Great Depression should be viewed as a global phenomenon with its roots in the gold standard so arduously restored in Great Britain in 1925. Temin (1989) and Eichengreen (1992) provide arguably the best recent accounts of the Great Depression. Not surprisingly, it has generated a vast literature, and continues to this day to fascinate economists and social scientists more generally. Unlike Friedman and Schwartz (1963, 1982), whose masterful works documented the role of monetary policy in explaining both the depth of the US Depression and its propagation outside the United States, Temin (1989) stresses the influence of a large ‘economic’ shock which was then magnified by an almost slavish adherence to the gold standard. Eichengreen (1992) would not disagree but would emphasize the breakdown in international cooperation among government and central bank officials. Others, such as Kindleberger (1986), might argue instead that the collapse of the post First World War monetary order produced financial chaos which, like the now much discussed ‘Asian flu’ of the late 1990s, caught on across much of the world.